Indonesia names former trader graft suspect in 'oil mafia' probe

JAKARTA (Reuters) - Indonesia’s Corruption Eradication Commission (KPK) on Tuesday named a former managing director of the trading arm of state energy company PT Pertamina a suspect in a graft case linked to oil trading with a Singapore-based company.

After nearly five years investigating what authorities have described as an “oil and gas mafia”, the agency charged Bambang Irianto, former managing director of Pertamina Energy Service Pte. Ltd. (PES), with receiving bribes from Singapore-based Kernel Oil Pte Ltd to secure oil trading deals.

Irianto had received at least $2.9 million between 2010 and 2013 “for the help he provided to Kernel Oil related to trades of refined oil and crude with PES”, KPK deputy chairman Laode Syarif alleged at a news conference.

Irianto, who could not immediately be reached for comment, could face a maximum penalty of 20 years in a jail and 1 billion rupiah ($71,200) fine if found guilty in a special anti-corruption court.

Syarif said the bribes were channelled through a shell company Irianto set up in the tax haven of the British Virgin Islands.

Kernel Oil had used the Emirates National Oil Company (ENOC) as a vehicle to circumvent rules that forced PES to prioritize a national oil company in a tender, he said.

“ENOC is an oil company, but it was not its oil that PES bought, it was Kernel’s oil. So it was using ENOC’s flag,” Syarif said.

Kernel Oil declined to comment and ENOC did not immediately respond to a request for comment via e-mail.

Pertamina’s spokeswoman Fajriyah Usman said the company “respects the legal case that is underway and the legal principle of the presumption of innocence”.

Pertamina dismantled its trading arm Petral - the parent company of PES - in 2015 under the orders of President Joko Widodo. Irianto was also Petral’s chief executive until the company was scrapped.

Widodo had made cleaning up Indonesia’s oil and gas sector a priority when he won the presidency in 2014, hoping it would improve the investment climate in Southeast Asia’s largest economy.

The president was re-elected for a second term in April.

An investigative audit of Petral by Australian forensic specialist KordaMentha, conducted on behalf of Pertamina, in 2015 revealed intervention by third parties had resulted in the state oil company paying higher prices for fuel and crude imports, according to Pertamina.

($1 = 14,045.0000 rupiah)

Additional reporting by Wilda Asmarini and Gayatri Suroyo; Editing by Ed Davies and Robert Birsel